Thinking Clearly About Customers

by James Allen, Frederick F. Reichheld, and Barney Hamilton

Which customers should you target? If you say "the most profitable ones," you're only half right. It's also important to attract buyers who will act as your company's growth advocates, encouraging others to buy from you. By assessing customer profitability and customer advocacy, you can tailor your strategies—and your investments—by segment:

• High-profit promoters. These are the customers you can't live without—your core. You want to design and deliver your offerings in a way that expands this group, and to target new buyers who share their characteristics.
• High-profit detractors. These customers, often as important a your "core," are sticking around because of inertia or because they feel trapped. They are profitable, attractive to your competition, and unlikely to suffer quietly. Losing them can dent your bottom line and your market share. You need to find out what's irking them and fix their problems fast.
• Low-profit promoters. These are diamonds in the rough—loyal customers whose current buying patterns leave money on the table. Tap into their advocacy by offering them additional products and services, but don't alienate them with heavy-handedness.
• Low-profit detractors. You can't please everyone. If there is no economically rational way to solve their problems, then help unhappy customers move to other providers.